Forex Market Review – Australian dollar rises on GDP data; euro steady ahead of EU Summit

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Euro was steady against the US dollar and edged up slightly in Asian trading. Though market sentiment was slightly upbeat, investors are cautious ahead of key events in Europe that are coming up – ECB interest rate decision tomorrow and the EU Summit in Brussels in Friday. Any news on a concrete solution to the debt crisis will be beneficial to the euro. A focal point will be any news that European leaders have taken measures to increase the capabilities of the rescue fund which will help indebted euro zone countries. EURUSD rose 0.2 percent to 1.3425 from 1.3401.

 

Looking ahead to today’s events, investors are focusing on a German bond auction and October industrial production data for Italy and Germany.

 

Sterling opened in Asia at 1.5599 and inched up tracking the EURUSD. Upbeat market sentiment helped cable rise to 1.5613. Key manufacturing production data are due later today.

 

Against the yen, the euro rose to 104.37 from 104.13. Dollar was little changed against the yen, trading a range since Monday, support at 77.61. The dollar will remain under pressure versus the yen as Japanese retail investors continue repatriating funds from overseas markets ahead of the year-end.

 

The Australian dollar moved up after good GDP data showed the economy grew 1 percent in the third quarter due to surprisingly upbeat household consumption and booming business investment. AUDUSD rose to a high of 1.0274 from the Asian open level of 1.0243 before stabilizing.

 

The New Zealand dollar rose in line with the Australian dollar after the GDP data since the two are close trading partners and the majority of New Zealand’s exports go to Australia. NZDUSD rose to 0.7812 from 0.7793. The focus turns to the central bank of New Zealand’s policy meeting on Thursday and whether it will cut rates. This will affect the kiwi.